Charge-offs are unpaid debts that collectors have written off as uncollectable. Because of this, they’re one of the most damaging negative items on your credit report. However, it’s not all doom and gloom if you receive a charge-off. If the negative information is inaccurate, you could file a dispute with the credit bureaus to get it removed without paying. And even if the charge-off is valid, you may still be able to wipe it off your credit report by negotiating with your creditor or debt collector.
Your credit report is like a personal financial report card that potential creditors — such as mortgage lenders — use to gauge your creditworthiness. If they see major red flags like charge-offs on your credit report, they may refuse to lend you money since this negative information indicates that you could be a high-risk borrower.
To avoid the damage a charge-off can cause to your credit, you may be wondering how to remove this negative information without paying off your debt obligation. Here’s everything you need to know about removing a charge-off from your credit report without paying.
What is a charge-off?
According to Experian, one of the three major credit bureaus, a charge-off is an unpaid debt that your creditor has given up on collecting and written the account off as uncollectible. For example, if you stop making payments on your credit card for an extended period of time — usually more than six months — your credit card issuer will most likely close your account and consider it charged off.
Charge-offs are one of the most damaging negative items you could have on your credit reports since they’ll typically stain it for up to seven years.
Removing a charge-off without paying
One way to remove a charge-off from your credit report without paying is if the information is inaccurate. Because of the Fair Credit Reporting Act, you can file a dispute with the credit reporting agencies — Experian, Equifax, and TransUnion. Here’s a step-by-step process on how to do so.
1. Get copies of your credit reports
Federal law gives you the right to request a free credit report from each of the three major credit bureaus — Equifax, Experian, and TransUnion — once every year at AnnualCreditReport.com.
2. Review your credit report for erroneous information
After getting your credit reports, check each of them thoroughly, especially the “credit history and accounts,” “public records,” and “negative information” sections. Then, identify the account you’d like to dispute and take note of the errors or inaccuracies.
Remember, your creditor may not report to all three credit bureaus, so don’t be surprised if you only find inaccurate negative information in one or two credit reports.
3. Gather supporting documents
After identifying the errors in your credit report, gather supporting documents that’ll help prove your case. Examples of supporting documents include invoices, contracts, account statements, correspondence with the creditor, etc.
4. File your dispute
Next, write a formal dispute letter detailing the errors or inaccuracies on your account. Be clear and concise, and include any supporting documents you’ve collected. The exact dispute process may vary depending on the credit reporting agency.
|How to file a dispute with Experian||How to file a dispute with Equifax||How to file a dispute with TransUnion|
|Use the Experian online dispute form||Use the Equifax online portal||Visit the TransUnion dispute online help page|
|Write to Experian National Consumer Assistance Center, P.O. Box 4500, Allen, TX 75013||Write to Equifax, P.O. Box 740256, Atlanta, GA 30374-0256||Write to TransUnion LLC, Consumer Dispute Center, P.O. Box 2000, Chester, PA 19016|
|Call 866-200-6020 to speak with an agent||Call 866-349-519 to speak with an agent||Call 800-916-8800 to speak with an agent|
5. Hire a credit repair company
Not everybody has the time to comb through their credit history for inaccurate information or reach out to the credit bureaus. That’s where credit repair companies come in.
A credit repair company will review your credit history and check for inaccuracies. If they find any, they’ll communicate with the credit bureaus on your behalf to have the information removed from your credit.
While credit repair companies can be helpful, make sure you’re working with a reputable company. To get started, take a look at some of the companies below.
Other options for removing a charged-off account
If the charge-off account is valid and you can’t file a dispute to remove it, don’t lose hope. According to Bruce Mohr, a financial advisor at Fair Credit, there are two other ways to potentially wipe the negative information from your credit report.
- Write a goodwill letter. Mohr suggests you try contacting the debt’s rightful holder by “writing a goodwill letter outlining your circumstances and politely requesting that the charge-off be removed from your credit record.” He says they might agree if you’re lucky, especially “if you have a long history with the initial lender and/or have other accounts with them.”
- Negotiate a pay-for-delete deal. Another method Mohr recommends that you try is negotiating a pay-for-delete arrangement. If successful, your debt collector will stop reporting the negative information to the credit bureaus once you pay it off within the agreed-upon time frame.
Note that your debtors aren’t obligated to make adjustments to your account just because you ask. However, it’s still worth a try.
How can I remove charge-offs from my credit report for free?
You can remove an erroneous charge-off from your credit report for free by filing disputes with the three major credit reporting agencies. You can typically initiate a dispute online or by mail. Just be prepared to provide documents that back your claim regarding the invalid charge-off — such as original invoices and account statements.
What happens if you don’t pay a charge-off?
If you don’t pay a charge-off, it’ll continue to be listed as an outstanding debt on your credit report. In other words, you’re still responsible for the debt, and creditors or collection agencies could continue to ask for payment.
Plus, this derogatory mark could harm your credit score and stain your credit report for up to seven years — making it difficult for you to qualify for loans and obtain credit.
What can you do if you can’t remove the charge-off?
If you can’t get your charge-off removed, try minimizing the effect that it has on your credit by taking action to rebuild your credit. For example, you can start by paying your bills on time and in full each month and keeping your credit utilization ratio low.
Remember that rebuilding your credit takes time, but as long as you stay consistent, you should see your score recover eventually.
How long does a charge-off stay on your credit report?
Similar to late payments and other negative information, charge-offs will stay on your credit report for up to seven years from the date of the first missed payment. What’s worse is that, in most cases, paying off the debt won’t remove the charge-off from your credit report before this limitation is up — it’ll simply update the status of the account.
Of course, if the charge-off on your credit report is a mistake, the credit bureaus will most likely remove the negative information if you file a dispute and prove that it’s indeed inaccurate. You could also negotiate with creditors and collection agencies to remove the negative mark from your credit report — though they’re not obligated to.
What is the 609 loophole?
Section 609 is a section in the Fair Credit Reporting Act stating that every credit reporting agency must disclose the information in your credit report upon request. The 609 loophole is a mistakenly glorified technique used by consumers to challenge the accuracy of their credit reports to get negative marks removed. They do this by claiming that if a creditor can’t provide proof of the negative information, it should be removed from their credit report.
However, there’s no evidence that sending a 609 dispute letter is more effective than the conventional way of disputing an error on your credit report.
- A charge-off is an unpaid debt that the creditor has written off and stopped trying to collect on.
- A charge-off can remain on your credit report for up to seven years and can have a damaging effect on your credit score.
- To remove a charge-off from your credit report without paying, you can file a dispute with the credit bureau if you can prove that the information is incorrect.
- Other than filing a dispute, you may also contact the debt collection agency and write a goodwill letter or negotiate a pay-for-delete deal to remove the charge-off from your credit report.
View Article Sources
- The Fair Credit Reporting Act — Federal Financial Institutions Examination Council
- How To Get Late Payments Removed From Your Credit Report — SuperMoney
- How Do You Get a Repossession Off Your Credit Report? — SuperMoney
- 7 Credit Card Debt Forgiveness Options — SuperMoney
- How Much Debt Is Too Much? And What Can You Do About It? — SuperMoney
- How to Remove Hard Inquiries From Your Credit Report (2023) — SuperMoney
- What is the Quickest Way to Fix Your Credit Score? — SuperMoney
- How Long Does it Take to Improve Your Credit Score? — SuperMoney
- How to Improve Your Credit Score — SuperMoney
- Best Credit Repair Companies — SuperMoney